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Gensler is short-changing public comments

Cato Institute | Jennifer J. Schulp and Nicholas Anthony | Jan 14, 2022

Gary Gensler short public comment periods - Gensler is short-changing public comments

Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), has set an ambitious agenda for the agency. Whatever one thinks about that agenda, it’s a lot to get done, even for a hard‐​charging, get‐​things‐​done guy like Gensler. Rulemaking is not a quick process, but Gensler seems to have found a way to shepherd his agenda through a bit faster: decreasing the time allotted for the public to comment on proposed rules. But failing to provide adequate time for public comment can diminish the voices of investors and market participants in the rule‐​making process. More so, it may hamstring the SEC in identifying the consequences of the proposed rules.

See:  FinCEN Extends Comment Period for Closing AML Regulatory Gaps for Digital Asset Transactions

The extent of the short‐​comment‐​period trend came to light when Senator Patrick Toomey (R‑PA) and Representative Patrick McHenry (R‑NC) pointed out that the SEC proposals under Gensler’s leadership have given the public less than 60 days to comment. This trend is a break from the norm, where executive orders, including under the Obama Administration, have recognized that 60 days is typically considered the minimum time frame for comments to be submitted. Where multiple rulemakings are pending, or the comment period includes holidays, agencies may consider longer timeframes for public comment.

But under Gensler, the SEC has consistently provided public comment periods that are shorter than the standard 60 days: two proposals had 60‐​day periods, three proposals had 45‐​day periods, and seven proposals had 30‐​day periods. Worse yet, most of the comment periods under Gensler have also overlapped with major holidays.

Letters from the public keep unelected regulators accountable to the world outside their doors. Even if a comment letter does not ultimately change the direction of pending legislation, it serves as a record of review that can be important for debates in the future. More so, welcoming the public to share their expertise can help to limit the likelihood of unintended consequences.

Also see:  Gensler’s Updated Regulatory Agenda Critized by SEC Commissioners Peirce and Roisman (Exempt Securities)

As SEC Commissioner Hester Peirce said in December:

“The more eyes allowed to peruse a rule carefully, the more likely we are to identify potential bad consequences ahead of time.”

Considering how deeply interconnected the U.S. financial system is, avoiding unintended consequences should be of paramount importance.

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